$137.8B U.S. ad spend for top 200 advertisers
At first glance, ad tech and marketing automation software appear to be strange bedfellows.
In its latest iteration, ad tech helps marketers reach broad swaths of anonymous people via automated ad buys. Marketing automation, on the other hand, lets marketers tailor messages to people in their databases, using cues such as email open history to determine which message to send next.
But despite their separate workflows, purposes and target audiences, the two are quickly coming together via software integrations.
In recent months, marketing automation company Marketo integrated with data provider Acxiom and Turn, an automated ad-buying platform with data management capabilities. The integrations give Marketo users the ability to serve ads to people resembling the prospects in their marketing databases, helping them grow their reach. The combination also lets marketers serve ads to prospects already in their databases, expanding their marketing automation efforts outside the email inbox.
"This is a big first leap," said Marketo CEO Phil Fernandez after the Acxiom integration. "The fact that we've aligned our products and integrated them and have customers actually doing it and running campaigns and measuring results is a milestone."
The integrations are not completely seamless -- the Marketo software itself can't be used to run ads; that's done by Turn. But Mr. Fernandez said deeper integrations are on the way: "I don't think you've seen anybody yet articulate how a [automated ad buying platform] fits literally in the business process workflow with a marketing automation system," he said. "We intend to do that and to do that soon."
A new phenomenon
Brian Kardon, CMO of predictive analytics company Lattice Engines, was in the room when talk of integrating ad-tech began at Eloqua, a marketing-automation software company where he was CMO from 2008 to 2012. (Eloqua is now owned by Oracle.) Back then, Mr. Kardon said integrating ad-tech was on the roadmap, but not a pressing need. "It's just happening now," he said.
One factor pushing the two together is the need for marketers to diversify their communication beyond email, Mr. Kardon said. "Marketers have become too email centric," he said. "Email marketing, it's kind of lazy. It's the same old same old. You keep blasting emails out and see the response rate. You know only 1% of the people are going to care about your message, and you'll get huge unsubscribes."
Smart b-to-b marketers -- the power users of marketing automation -- are moving to advertising to get their message across more channels, he said.
Bizo, an ad-tech company just acquired by LinkedIn, is integrated with Eloqua and Marketo for this purpose. It also recently released a product tailoring ad creative to prospects based on their interactions with a company, mirroring how traditional marketing-automation software works, but using online ads to deliver the message.
"You can only reach people with an email so often before they get pissed and don't open their emails anymore," said Bizo CEO Russ Glass. "People don't get upset about seeing an ad multiple times a day."
Using ads from Bizo in conjunction with email marketing helped DocuSign increase its conversion rate, according to Meagen Eisenberg, VP of demand generation for DocuSign. "It is working," she said.
But running ads isn't attractive to all marketers. "Typically our customers are accessible enough that advertising on a big scale doesn't make a lot of sense," said Kim Metcalf-Kupres, CMO of Johnson Controls, an industrial b-to-b company.
The role of data
Marketing automation tools are also often only as good as the lists fed into them, meaning they aren't useful for marketers that don't have significant databases of prospects. This is where the data platforms -- Acxiom, Turn, and recent Oracle acquisition BlueKai -- come in. They allow marketers to take their lists of known prospects and form audience clusters with similar characteristics that can be reached with ads.
Maureen Little, Sr. VP business development at Turn, said the integration allows marketers to pick desirable segments within their marketing-automation platform, and expand those specific groups. "I can say, 'Gosh, this is such a valuable segment; how many more people can I find that look like it?'" she said. "They will be able to say 'I just took the audience that is a couple hundred thousand and I believe that I've found 1.2 million people who look significantly like this consumer.'"
Looking for growth
Financial considerations have also driven marketing automation and ad tech together. "In a lot of ways, it's the quest for growth that has pushed them there," Mr. Kardon said. "Companies like Marketo and Salesforce are on this treadmill and investors are looking very closely at them and the expectations are extremely high for growth. If they miss their growth targets, those stocks are going to be punished mercilessly."
Some of that punishment is already being meted out on Marketo: Its stock has dropped from over $44 dollars in February to slightly above $28 dollars today. But Marketo VP Mike Moeller said running a business for the markets is not what Marketo is doing.
"Our moves are never around Wall Street," he said. "They are always around where we see the market opportunity."